OPTI trades actively, but unchanged; Rite Aid holds in ahead of numbers; Dish wins Blockbuster

By Stephanie N. Rotondo

Portland, Ore., April 6 - Strength remained in the distressed debt market Wednesday, helped out in part by an increase in total secondary trading volumes.

"We had a good $1.7-odd billion in secondary," a trader said.

Trading in OPTI Canada Inc. made up a good chunk of that, according to traders. But while the bonds were active - due to a news story out of Edmonton, Alta., one source opined - they were virtually unchanged on the day, but up on the week.

In the retail arena, Rite Aid Corp.'s notes were steady and "subdued" ahead of the company's earnings report on Thursday.

Blockbuster Inc. was meantime a bit weaker as the winner of Tuesday's auction was announced.

OPTI active, unchanged

OPTI Canada paper was among the day's most actively traded credits, with $50 million to $60 million of the company's subordinated paper changing hands, a trader said.

He placed the 7 7/8% and 8¼% notes due 2014 around 541/2, which he deemed "kind of right where it's been, but certainly better on the week."

He said the bonds began trading Monday around 52 bid, 52½ offered.

Another trader also said the debt was active, but unchanged around the 54 level.

The first trader said the surge in action was due to a news story from the Edmonton Journal. The story discussed the Alberta government's attempts to increase its conserved lands, which some environmental groups are lambasting as not good enough.

"Anytime there is stuff in the oilsands area, OPTI will trade," he said, adding that the news was really "meaningless" to OPTI specifically.

OPTI is a Calgary, Alta.-based oilsands producer.

Rite Aid flat pre-earnings

A trader said Rite Aid's bonds were "dead flat ahead of their numbers," which will come out on Thursday.

He added that trading was "reasonably subdued," with just $25 million to $30 million of the entire structure trading.

He pegged the 9½% notes due 2017 around 91, "up fractionally." The 7½% notes due 2017 were unchanged at par ¼ and the 10 3/8% notes due 2016 were trading with a 108 handle.

"I suspect they will be more active tomorrow," he said.

Another trader also saw the 9½% notes around 91, calling that up a quarter-point. The 7½% notes were seen at par 1/4, also unchanged.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Dish wins Blockbuster auction

Blockbuster's 9% notes due 2012 were trading around 25 cents on the dollar, a trader said, though they were being quoted higher.

He said the markets for the notes were 7/8 bid, 1 offered, with just a couple million turning over.

The Dallas-based movie rental chain was put up for auction on Tuesday and, on Wednesday, the market learned that Dish Network Corp. had beat out other bidders - including a group led by billionaire investor Carl Icahn - with its $320 million offer.

Dish will purchase "substantially all" of the company's assets for about $228 million in cash. The remaining part of the offer includes liabilities associated with the business.

Market watchers are already wondering what the Dish merger will do for Blockbuster. It is believed that Dish will not liquidate the company - though it has said it will continue to shutter some stores - but will instead use its satellite and on-demand platform to give Blockbuster a leg up on competition such as NetFlix.

Caesars gains, TXU dips

Elsewhere in the distressed space, Caesars Entertainment Corp.'s 5 5/8% notes due 2015 were "up a couple points" at 84 3/8, according to a trader.

He said about $15 million to $20 million of the debt traded.

Another trader said Energy Future Holdings Corp.'s 10¼% notes due 2015 were half a point weaker at 661/2.

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